Zamiin-Uud Logistics Center to boost cargo flow through border

“Daily life begins at 8:00 p.m. for residents in ZamiinUud soum (in Dornogovi Province). Since it’s extremely hot, muggy and windy here, children and the elderly go outside during evening hours,” said Deputy Mayor of ZamiinUud soum O.Uurtsaikh.

Especially people living in buildings facing the main road have to endure the loud traffic noise of cars driving by, train noise and loud shouting of drunk people passing by. Dornogovi Province has the longest road and railway track in Mongolia. As the nation’s largest border checkpoint is located in Zamiin-Uud soum, the local population alone exceeds 18,300 people with around 6,500 to 8,000 temporary residents coming and going each day through the border. It definitely is a crowded area.

Landlocked Mongolia relies on its two large neighbors, Russia and China, for access to seaports. In recent years, trade flows have been reoriented from Russia and most imports (over 80 percent) now come from China through the Zamiin-Uud border checkpoint in southeast Mongolia. The bulk of Mongolia’s exports also pass through Zamiin-Uud en route to Tianjin port, the only port in China available to Mongolia for international trade. Moreover, Zamiin-Uud is the only point on the border with China where there are both road and rail connections, which extend north through Ulaanbaatar and then on to Russia.

The critical role of Zamiin-Uud as Mongolia’s main connecting point with the rest of the world has resulted in marked increases in traffic that have led to considerable congestion at the border and in holding areas on the Mongolian side. For example, prior to the global economic crisis in late 2008, there were a reported 200 large trucks per day waiting in UBTZ Terminal 3 to discharge construction and building materials for destinations beyond Zamiin-Uud.

With demands for international trade increasing each day, the traffic movement to Zamiin-Uul has dramatically escalated in recent years. For instance, Mongolia received 1,061 trains, or 48,375 wagons, from Erenhot in the first quarter of this year, which is 146.5 percent higher than that of last year. Mongolia too sent 142.8 percent more trains, specifically 974 trains with 47,435 wagons, to China through Zamiin-Uud. Reportedly, during this span of time, European countries and Russia transported 739,500 tons of cargo to Erenhot through Zamiin-Uud.

Based on this, Zamiin-Uud inarguably has become not only a bridge for exportation and importation but a transit passage. However, since a long time ago, studies have been indicating that the Zamiin-Uud border checkpoint will likely not be able to keep up with the ever-growing foreign trade circulation. The government partnered with the Asian Development Bank (ADB) and launched a large project to build a Zamiin-Uud Logistics Center in 2010 to prevent failures at the checkpoint.

The project aims to build an intermodal logistics center capable of conducting road transport, railway transport, and combined road and railway transport. The government is investing 26.64 million USD into this project with an additional grant of 45 million USD from ADB. The construction work for the center has exceeded 80 percent completion and is expected to be handed over to the government by August.

ADB’s Country Director in Mongolia Yolanda Fernandez Lommen recently visited Zamiin-Uud with associated people for two days to oversee the project progress.

“At present, the Zamiin-Uud border checkpoint receives eight wagons a day from Erenhot. Commissioning a 24-hour intermodal logistics center will enable the border to receive double this amount, enhancing its capacity to some 800 wagons, or 16 trains, a day,” ADB transportation expert G.Anand said.

“Increasing the volume of imports and exports, as well as cargo transported from Southeast Asia to Russia and then to member states of the European Union will become a valuable contribution to Mongolia and increase its competitiveness against international transit corridors in the region.”

The governments of Mongolia and China are sparking discussions to raise the trade turnover by over 60 percent to 10 billion USD by 2020. Project leaders believe that the new logistics center will facilitate the process for achieving this target. Project coordinator D.Enkhbaatar didn’t hide his concern about this target being unrealistic, as he finds insufficient research on the actual economic benefits of increasing trade turnover. He noted that this kind of talk has been ongoing for over a decade.

Like the frequently used Mongolian proverb “Instead of getting prepared for milking, get your container ready”, the government is focusing on enhancing the flow of cargo through borders and customs with the expectation that foreign trade will dramatically increase in one way or another by 2020.

During her visit, Lommen underlined that keeping original project coordinators in charge of the project made it possible to make the new logistics center operational on time despite the fact that there was a need to reselect project implementers.

Before going to the project site located approximately nine km from the border crossing with China, 5.7 km from Zamiin-Uud soum center, and five km from the existing UBTZ freight Terminals 1 and 2, the delegation oversaw operations at MCh-1 and MCh-2 departments of cargo and transshipment of goods in the Zamiin-Uud border checkpoint. Project leaders said that they have built roads connecting the intermodal logistics center to the soum center and a bridge, and that drivers must drive on roads specifically for their vehicle type, passenger car or heavy duty truck, to reduce traffic and maintain good road quality. Heavy duty trucks entering through the border can directly drive to Zamiin-Uud soum center via the northern road.

The newly built bridge, named Zamiin-Uud’s Zaisan, passes over the railway headed to the logistics center.

According to ADB representatives, the project will greatly alleviate this congestion because all rail and truck (heavier than one ton) will utilize the logistics center for entry into Mongolia. The current border facilities will be used by pickup trucks (weighing less than a ton), four-wheel drive vehicles, passenger cars and foot traffic. This arrangement is expected to reduce congestion and waiting times for all freight and passengers passing through the border, and will hopefully facilitate further trade and job creation in Zamiin-Uud.

Importantly, the border facilities such as customs and quarantine departments at the Logistics Center will enable the use of the single window/ single facility concept that will reduce waiting and processing times, which will be a further boost to facilitating trade, says a representative. He noted that it’s especially important that the logistics center is designed for the rapid but systematic and thorough processing of goods because of the traffic increases that will result from the economy’s rapid expansion over the next decade based on the exploitation of large minerals deposits. Although some of the minerals products may be exported by routes not passing through Zamiin-Uud, the growing economy and rising incomes are estimated to result in more goods passing through it.

“In order to meet this increased demand, the logistics center will be based on designs that incorporate global best practices for intermodal logistics including integrated management information systems, cargo handling technologies, and storage (utilities and plugs for refrigerated containers) in marked contrast to current facilities that are inadequate in terms of size, technology and operating processes.

“By utilizing these global best practices, Mongolia will be demonstrating its commitment to upgrade its transport infrastructure and logistics, and working towards its goal to become one of Asia’s most efficient countries for logistics in contrast to its current very low ratings on the World Bank’s logistics performance index. To not take these steps would be a signal to potential investors and businesses that transport costs and logistics inefficiencies will continue to increase, which would come at great cost to the country’s development and poverty reduction,” ADB reported.

Through the project, a three-storey building will be built to provide an administrative office. It will also have a parking outside, banking services, meeting rooms, restaurant and resting area for drivers and passengers, according to D.Enkhbaatar. He noted that the cooling system for containers installed at the building will prevent foods from rotting.

The project team stated, “Small works such as finishing the construction of the administrative office and storage are left. There’s nothing to worry about now as the most difficult tasks are done, including those related to groundwork, infrastructure, engineering network, electricity and heating networks, and fiber cable.” They added that key construction materials such as reinforcement concrete, base cement, and concrete plates used for the logistics center were inspected at a laboratory.

Reportedly, 10 out of 12 construction companies working on the project are Mongolian companies. Susong Engineering Co., Ltd was hired as an advisor for the project to provide an independent monitoring on the process.

Lommen expressed her confidence in the Zamiin-Uud Logistics Center’s contribution in the development of Zamiin-Uud soum, Dornogovi Province and Mongolia very soon. The project is believed to be an essential investment completed at the most opportune time. However, we must continue to keep an eye on the project to attain the most out of it.